Worries extend stock market's slide
NEW YORK -- Wall Street skidded lower in another fitful session Tuesday, with investors worried the tumbling economy may not only cripple mortgage lenders like Countrywide Financial Corp., but also create problems for other companies like AT&T Inc.
The Dow Jones industrials fell nearly 240 points.
Investors tried to take the market higher at many points during the day but eventually succumbed to another stream of bad news. The Dow and the Standard & Poor's 500 index are down more than 5 percent so far this year and the Nasdaq composite index is down nearly 8 percent, having been pummeled since Jan. 1 due to worse-than-anticipated readings on the economy.
The day's events raised fears fourth-quarter earnings reports, which start pouring in later this week, may not meet already lowered expectations.
The National Association of Realtors said early Tuesday its index tracking pending U.S. home sales fell 2.6 percent in November, a larger decline than the market expected. Jitters about the profitability of Countrywide and KB Home kept Wall Street on edge throughout the day, and President Bush reiterating the problems facing the economy likely added to the market's uneasiness.
Many traders have bet recently that Countrywide might need to file for bankruptcy. Countrywide denied that rumor Tuesday, but its stock plunged 17 percent. Lehman Brothers said in a note that Countrywide's earnings power has declined severely, and The New York Times reported the company fabricated documents related to the bankruptcy case of a Pennsylvania homeowner.
Late in the day, the chief executive of AT&T said at a conference the phone company was seeing some slowdown in its consumer businesses, though not in wireless. That was the last straw for the market and sent stocks tumbling.
The day's abortive advance was due in part to rising hopes the Federal Reserve will continue its campaign of rate cuts to prevent a recession. The Fed meets Jan. 29-30.
The Dow fell 238.42, or 1.86 percent, to 12,589.07. Broader stock indicators also sank. The S&P 500 index dropped 25.99, or 1.84 percent, to 1,390.19, and the Nasdaq declined 58.95, or 2.36 percent, to 2,440.51.